Last reviewed: 13 November 2026. A supply to an SEZ unit or developer for authorised operations is a zero-rated supply under section 16 of the IGST Act, exactly like an export. The supplier can either pay IGST and claim it back, or supply under LUT and claim the unutilised credit. The claim always sits with the supplier, and it lives or dies on one document: the endorsement of the specified officer of the zone.
Part of our GST refund series. For every refund category, the common process, time limits and interest, start with the complete GST refund guide.
The two routes
| Point | With payment of IGST | Without payment, under LUT |
|---|---|---|
| Tax charged on invoice | IGST | None; invoice carries the LUT endorsement |
| Refund claimed | IGST paid on the supply | Unutilised ITC under the rule 89(4) formula |
| RFD-01 category | Refund on account of supplies to SEZ unit or developer with payment of tax | Refund of ITC on supplies to SEZ unit or developer without payment of tax |
| Provisional refund | 90% under section 54(6) | 90% under section 54(6) |
The SEZ unit itself does not file the claim. Under rule 89(1), the supplier of goods applies after the goods are admitted in full into the SEZ for authorised operations, as endorsed by the specified officer of the zone, and the supplier of services applies with evidence, similarly endorsed, that the services were received for authorised operations.
Conditions to check before invoicing an SEZ
- The recipient holds a valid SEZ unit or developer approval and the supply is for its authorised operations. A supply for non-authorised purposes is taxable in the normal way.
- The invoice describes the supply as made to an SEZ, and for the LUT route carries the LUT reference.
- The supply is reported in GSTR-1 as an SEZ supply (with or without payment) and not as a B2B domestic supply.
- For goods, the zone's admission is recorded; for services, the unit confirms receipt for authorised operations in the form the zone accepts, increasingly through SEZ Online.
Documents for the refund
- Invoice-wise statement of supplies to the SEZ with the endorsement reference for each.
- Copies of the endorsed invoices or the SEZ Online confirmation.
- For the LUT route, a declaration under the third proviso to section 54(3) that no drawback of central tax or refund of IGST has been claimed on the same supplies.
- For the LUT route, the rule 89(4) computation and the statement of input invoices (in the substituted RFD-01 from 1 December 2026).
- Declaration from the SEZ unit or developer that it has not availed input tax credit on the supply, where the claim is for tax paid.
Worked example
An IT company in Thane provides software development services of ₹25,00,000 to an SEZ unit in Navi Mumbai in a quarter and charges IGST of ₹4,50,000, paid in GSTR-3B. The unit endorses each invoice for authorised operations. The supplier files RFD-01 for ₹4,50,000 with the endorsed invoices. The portal can generate a provisional order of ₹4,05,000 (90%) within three working days of acknowledgement, and the balance follows the final order. The relevant date is the due date of the GSTR-3B for the month of supply, so the claim must be filed within two years of that date.
Common issues
- Endorsement missing or delayed. Without it the claim is incomplete. Agree the endorsement process with the unit at the start of the contract.
- Wrong reporting. SEZ supplies reported as domestic B2B supplies with CGST and SGST leave the supplier with a wrong-head problem, covered in our guide to excess and wrong-head tax refunds.
- Double benefit. If the SEZ unit has taken credit of the IGST charged, the supplier's refund will be questioned.
Exports outside India follow the same zero-rating logic. See refund of IGST paid on exports and refund of ITC on exports under LUT.
Frequently asked questions
Who claims the GST refund on supplies to an SEZ, the supplier or the SEZ unit?
The supplier. Rule 89(1) requires the supplier of goods or services to the SEZ unit or developer to file the refund application, supported by the specified officer's endorsement that the supply was received for authorised operations.
Is a supply to an SEZ unit zero-rated?
Yes, if it is for the unit's or developer's authorised operations. Section 16(1)(b) of the IGST Act treats it as a zero-rated supply, so the supplier can supply under LUT or pay IGST and claim a refund.
What is the relevant date for an SEZ refund?
The due date for furnishing the return under section 39 for the period in which the supply was made. The claim must be filed within two years of that date.
Is a 90% provisional refund available for SEZ supplies?
Yes. SEZ supplies are zero-rated, so section 54(6) applies. From 1 November 2026, the portal generates the provisional order in RFD-04 within three working days of acknowledgement, based on system risk evaluation.
What if I charged CGST and SGST on a supply to an SEZ?
That is tax paid under the wrong head. The supplier pays IGST or treats the supply correctly and then claims refund of the CGST and SGST under section 77 and rule 89(1A), within two years of paying the correct tax.
We review eligibility, build the computation and reconciliations from your books and returns, file the RFD-01, and handle deficiency memos, show cause notices and appeals until the claim is closed. The outcome rests with the proper officer; our work is to put a complete, defensible claim in front of them.
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This article is for general information and does not constitute advice on any specific case. Sources: sections 54 to 56 and 77 of the CGST Act, 2017; rules 89 to 97 of the CGST Rules, 2017 as amended by Notification No. 05/2026-Central Tax dated 26 October 2026; Notification No. 03/2026-Central Tax; CBIC circulars cited in the text. Rules, forms and portal functionality change; confirm the current position on the CBIC tax repository and the GST portal before filing. Firm details: Somesh Chandak & Associates, Chartered Accountants, Unit 119, 1st Floor, Centura Square IT Park, SG Barve Road, Wagle Estate, Thane West 400604. FRN 158694W.